Sad tale of the rubber farmers: plunging prices and deaf politicians

The price of a commodity like rubber is supposed to be adjusted in accordance with market mechanisms, based on a world market. But it becomes politicised when farmers call on governments to intervene in the price whenever the level drops. In fact, the rubber sector was regulated by the Rubber Authority of Thailand, a juristic entity under the rubber laws. The Bangkok-based RAOT was authorised to manage the whole system of rubber production and rubber funding, as well as stabilise the rubber price in the domestic market.

By the book, that meant governments did not need to do anything about a plummeting price. It was the duty and responsibility of the RAOT to respond to the problem. It had a fund to help poor farmers who might be in trouble when the price was fell – or production dropped due to bad weather or disaster.

Unfortunately, a free market did not work well and politicians, elected or not, knew better about how to manipulate the commodity for their personal gain.

More than 60 per cent of rubber plantations are in the South. Trading and pricing are mostly determined in the southern markets. The South is also a major stronghold of the Democrat Party. People in the South have been voting solidly for the Democrats for decades. The party exploits this support from southerners’ for its gain, while Democrat politicians remain involved in rubber market and trading.

When Suthep and his People’s Democratic Reform Committee staged a series of political protest in Bangkok aiming to topple the government under Yingluck Shinawata in late 2013 and early 2014, he gained mass support from southerners, mostly rubber farmers.

The average price of rubber during Yingluck’s administration was Bt70-80 per kilogram. Yingluck needed to do nothing as the price was relatively high due to strong demand from China and the rocketing price of oil — a substitute material for rubber. Indeed, at the beginning of her administration the price for rubber was over Bt100 per kilogram. Suthep and the PDRC then demanded the Yingluck government raise the price to more than Bt100 per kilogram. For political purposes, Yingluck injected funds to subsidise the farmers, but failed to satisfy them, as the objective of the protest was to unseat the PM, not lift the rubber price.

Rubber farmers in those days were in difficulty as the economy was dropping. Rubber plummeted due to its sluggish price in the world market as petroleum was also heading down and the Chinese economy — the main importer of Thai rubber – was slowing.

The average price for rubber these days is just Bt 20-30 per kilogram.

Prime Minister Prayut Chan-o-cha, the coup leader who helped Suthep and rubber farmers to topple Yingluck from her position, came to power at a bad time for them. And, there was further bad luck, as Prayut and his crew knew little about economic management and commodity markets. His deputy Prawit Wongsuwan – who probably can’t distinguish between rubber and other trees – promised to raise the price to more than Bt80 per kilogram within one year after taking power. The price has never risen. It has gone down and down while the government’s measures have failed to raise prices by a single baht.

Rubber farmers and tappers cried and cried until their tears came near to blood. Some committed suicide, hanging themselves from rubber trees to send a deadly message to the people in power, notably their beloved Democrat politicians in their constituencies, to find solutions to help them.

Some wanted to stage rallies to push demands on the military government and called on Suthep for help. They failed in their attempts to stage the demonstrations, as the military government threatened to arrest them. Suthep even told them not to come out in protest as the government was working to help them.

But the government has no essential measures to offer them since the rubber farmers and Democrats have apparently lost their political power to pressure the regime. Unfortunately, our leaders don’t seem to realise that fact.